HB 60-UNIFORM REAL PROPERTY TRANSFERS ON DEATH  9:44:41 AM CHAIR COGHILL reconvened the meeting and announced the consideration of HB 60. "An Act adopting and relating to the Uniform Real Property Transfer on Death Act; relating to establishing the law governing certain trusts; and relating to disclaimers of property interests. " This was the first hearing. 9:45:54 AM REPRESENTATIVE MAX GRUENBERG, Alaska State Legislature, Juneau, Alaska, sponsor of HB 60, said this legislation does two things. First, it has a provision that models a Delaware Supreme Court case which said that if a trust instrument is silent as to the choice of law and it is administered in Delaware, the choice of law would be Delaware. The House Judiciary Committee added this provision in Section 1 of the bill. It helps keep Alaska's trust laws as competitive and trust-friendly as possible. The rest of the bill adds a new chapter to AS 13 called the "Uniform Real Property Transfer on Death Act." This avoids probate and legal fees for estates that aren't huge or complicated. The property owner records a deed that says it becomes effective upon their death. The property owner has the ability to change the deed but it must be recorded so that it is in the chain of title and easily ascertainable. This protects the title and any of the people who may be involved. REPRESENTATIVE GRUENBERG noted that the bill contains forms for the deed and the revocation of the deed. It has been thoroughly vetted through the Bar probate and real property sections and they suggest seeking legal advice if there is any doubt. About 23 states have these laws. The first was passed in the 1980s and then the Uniform Commissioners promulgated this Act about six or seven years ago and it is gaining appeal. 9:51:31 AM SENATOR WIELECHOWSKI asked if there was a financial limit on the size of an estate that can be deeded. REPRESENTATIVE GRUENBERG said no. SENATOR WIELECHOWSKI asked if the property has to be in Alaska. REPRESENTATIVE GRUENBERG said yes and whether a TOD deed would be effective depends upon the law in the state where the property is located. For example, Missouri has a similar law so a TOD deed would apply, whereas California does not so a TOD deed would not apply. CHAIR COGHILL asked how Section 1 applies to the Uniform Act. REPRESENTATIVE GRUENBERG explained that that provision applies to states in which trusts are administered. It clarifies that it is the law of Alaska generally that applies if the trust is administered here regardless of where the property is located, the trust was drafted, and the donors and beneficiaries reside. 9:56:10 AM SENATOR WIELECHOWSKI asked if this would allow parties in other states to bypass estate taxes. REPRESENTATIVE GRUENBERG clarified that it is not a tax saving device. A transfer on death is subject to estate taxes. SENATOR WIELECHOWSKI asked if the main advantage is to avoid probate. REPRESENTATIVE GRUENBERG said yes. SENATOR DYSON questioned the provision in paragraph (4) on page 5, lines 6-7. REPRESENTATIVE GRUENBERG explained that the transfer doesn't occur until the transferor's death. SENATOR WIELECHOWSKI asked if the contents of a property transfer along with the property. REPRESENTATIVE GRUENBERG replied only something like a shed that is affixed to the land would transfer with the property. SENATOR WIELECHOWSKI asked Mr. Orzeske if there were inheritance tax implications. 10:02:12 AM BEN ORZESKE, Uniform Law Commissioner, Chicago, Illinois, said the bill removes the property from the probate estate for administrative purposes, but would not remove it from the taxable estate under federal law. REPRESENTATIVE GRUENBERG added that it would be subject to death tax. MR. ORZESKE agreed that the bill doesn't affect whatever tax it would be if the property were transferred any other way. SENATOR MCGUIRE requested a list of the states that have TOD deeds. Unidentified speaker said the packets should contain Mr. Orzeske's written testimony that has an attachment showing those states. MR. ORZESKE reported that since he submitted his testimony, Washington state and West Virginia enacted the Uniform Act bringing the total to 23. 10:04:54 AM SENATOR MCGUIRE moved to report HB 60 from committee with individual recommendations and attached fiscal note(s). CHAIR COGHILL announced that without objection, CSHB 60(JUD) was reported from the Senate Judiciary Standing Committee.